Starting an LLC in Alabama comes with a little Southern charm and a lot of practical advantages. With low filing costs, business-friendly regulations, and a growing mix of industries, Alabama offers a welcoming place to put down roots and build something real.
The Yellowhammer State’s LLC filing and registration process is relatively simple, but there are important steps you can’t miss. Let’s break down how to open an LLC in Alabama, so you know exactly what to expect.
How to start an LLC in Alabama in 5 steps
To open an LLC in Alabama, you need to choose a business name, appoint a registered agent, file a Certificate of Formation, write an operating agreement, and get an EIN from the IRS. This may sound like a lot, but don’t worry! Every part of the process can be completed in just a few days.
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1. Choose a name for your LLC
Before starting on paperwork, you need to find a name for your LLC. Your name represents your brand and appears on legal documents, so it should be memorable and compliant with state rules. The Alabama Secretary of State requires that your LLC name:
- Includes “Limited Liability Company” or an abbreviation like “LLC” or “L.L.C.”
- Is distinguishable from other registered business names in Alabama
- Does not imply a connection to a government agency
- Avoids restricted terms such as “bank,” “trust,” or “insurance” unless approved
After choosing a name, search the Alabama Secretary of State business entity database to confirm availability. The state requires all LLCs to reserve their name before registering. You can reserve your Alabama LLC name for $25.
Get your business domain name
Now that you have the perfect name for your business, grab a matching domain. Doing so helps protect your branding and online presence, which builds credibility and makes it easier for customers to find you.
Get a DBA
A DBA (“Doing Business As”), commonly called a trade name in Alabama, allows your LLC to operate under a different name than its legal one. For example, “Birmingham Home Services LLC” could register a DBA to operate as “Magic City Repairs.” You can register a trade name for $30 through the Alabama Secretary of State by filing a trademark application. If you’re unsure whether this is the right path for your LLC, read this guide on what is a DBA.
2. Appoint a registered agent
Every Alabama LLC must appoint a registered agent to receive legal notices and official state correspondence. The registered agent helps ensure your business stays compliant and informed. They must:
- Have a physical street address in the state
- Be available during normal business hours
The agent can be yourself, another individual, or a professional service. Many business owners choose a registered agent service to maintain privacy and avoid missed documents.
3. File a Certificate of Formation
For your Alabama LLC to be official, you have to file a Certificate of Formation. Alabama has a unique process that involves filing with both the Alabama Secretary of State and the local county probate office, but all filings can be completed by mail through the Secretary of State. Be prepared to provide:
- The LLC name
- The registered agent’s name and address
- The principal business address
- The organizer’s information
- Your name registration certificate
The filing fee is $200, and you must attach your name reservation certificate to your application.
4. Create an operating agreement
An LLC operating agreement is not required by law in Alabama, but it’s always a good idea to have one. Even single-member LLCs benefit from an operating agreement because it reinforces the separation between personal and business finances.
This internal document outlines how your LLC operates and helps protect its limited liability status. Some financial institutions may require a copy of your operating agreement before opening an account. Be sure to include:
- Member and manager roles
- Ownership percentages
- Profit and loss distribution rules
- Voting procedures
- Guidelines for adding or removing members
- Dissolution terms
5. Get an EIN
An Employer Identification Number (EIN) is a federal tax ID issued by the IRS. Most Alabama LLCs need an EIN to:
- File taxes
- Hire employees
- Open a business bank account
- Apply for licenses or permits
LLCs can apply for an EIN through the IRS website. Still have some questions about which business tax ID you’ll need? Learn about the difference between TIN and EIN here.
How long does it take to get an EIN?
Online applications are approved immediately. Mail or fax submissions typically take two to four weeks.
How much does an EIN cost?
There are no application, maintenance, or renewal fees for EINs.
Types of LLCs available in Alabama
There are multiple types of LLCs in Alabama to choose from. Each has its own benefits and considerations, so take some time to research them before committing.
- Single-member LLC: A streamlined option for solo founders who want structure and protection.
- Multi-member LLC: Designed for businesses with two or more owners sharing control and profits.
- Member-managed LLC: All owners take part in daily operations and decision-making.
- Manager-managed LLC: Owners appoint managers to handle operations while they stay hands-off.
- Professional LLC: Required for licensed professions like doctors, lawyers, or accountants.
- Series LLC: Allows multiple business units under one LLC, with separate assets and liabilities.
How much does it cost to start and run an LLC in Alabama
Forming an LLC in Alabama is fairly affordable, but it does come with a few state-specific fees to plan for. Here’s a general breakdown of common costs:
- Certificate of Formation: $200
- Name reservation: $25
- DBA registration (optional): $30
- Registered agent service (if applicable): $50–$250 per year
- Annual Business Privilege Tax: Minimum of $100 (based on LLC net worth)
- Alabama Business Privilege License: Varies by location
- Business licenses and permits: Vary by industry and location
- Taxes: Alabama LLCs may be subject to state income tax, along with federal and applicable sales or employer taxes
Most business owners spend roughly $225–$600 to form and maintain an Alabama LLC in the first year, depending on chosen services and local requirements.
What happens after your LLC is up and running
Forming your Alabama LLC is a big step, but there are a few follow-up tasks to complete that help keep your business compliant.
Open a business bank account
Opening a dedicated bank account for your Alabama LLC helps keep personal and business finances clearly separated. This separation is key for maintaining liability protection, simplifying bookkeeping, and presenting a professional image to customers and lenders. Most banks will ask for:
- Your business address
- Your approved Certificate of Formation
- Your EIN from the IRS
- Your operating agreement
- A valid photo ID for all account holders
- An initial deposit
File for permits and required business licenses
Depending on what your LLC does and where it operates, you may need specific licenses or permits. Requirements are often set at the state, county, or city level. To find out what your business needs:
- Contact your local city hall or county office for local permits
- Check federal requirements if your business involves regulated activities like food, transportation, or health services
- Visit the Alabama Department of Revenue Business and License page
Alabama Business Privilege License
The Alabama Business Privilege License is a local license that allows your LLC to legally operate in a specific city or county. Every business in Alabama must have this license. It is issued and renewed yearly through the local probate office or licensing authority, not the Department of Revenue. Overall costs vary by location.
File the Alabama Business Privilege Tax Return
Alabama’s Business Privilege Tax Return is the state’s annual report for LLCs. An initial return is due within 2.5 months of forming your LLC, followed by annual returns each year thereafter. The tax is based on your LLC’s net worth and will be a minimum of $100. Returns are filed online through the My Alabama Taxes portal.
Other things to consider for your Alabama LLC
Your doors are open and customers are filing in, but there are two more things you should know about running an LLC in Alabama.
Get a Certificate of Existence
A Certificate of Existence, sometimes called a Certificate of Good Standing, is an official document that verifies your LLC is active, compliant, and current on all filings and fees. You might need this certificate when:
- Opening a business bank account
- Applying for loans or financing
- Registering your LLC in another state
- Working with investors or partners
You can request a Certificate of Existence online through the Alabama Secretary of State’s website. The document is typically issued instantly online and costs $25.
Get business insurance
Forming an LLC in Alabama helps protect your personal assets, but it doesn’t shield your business from every risk. Business insurance adds another layer of protection by covering things like property damage, lawsuits, injuries, and unexpected interruptions.
The right coverage can keep operations moving when issues come up. Insurance needs vary by industry, size, and location, so choose coverage that matches how your business operates.
When it's a good idea to start an LLC in Alabama
Alabama is a strong choice for entrepreneurs who want a balance of affordability, structure, and long-term flexibility. Forming an LLC here may make sense if:
- You want personal liability protection while keeping business setup relatively simple
- You plan to operate primarily in Alabama and want to meet state and local requirements from the start
- You’re launching a small or midsize business and want flexibility in management and taxation
- You want credibility with customers, vendors, and lenders without the complexity of a corporation
- You’re building a business in a growing Alabama industry like manufacturing, healthcare, construction, or professional services
Launch your Alabama LLC with GoDaddy
Starting an LLC in Alabama gives your business a real foundation, one that lets you grow, take on clients, and protect what you’re building along the way. Alabama keeps the process practical and predictable, which means less time decoding rules and more time turning ideas into momentum.
If you’re ready to stop planning and start doing, GoDaddy Airo can help you set up your LLC for free. From filing paperwork to keeping track of key requirements, Airo helps you move faster and stay organized so you can focus on running your business. Get started today and turn your Alabama business idea into a reality.
FAQ
What are common Alabama LLC mistakes?
Some of the most common mistakes include choosing a name that’s already in use, skipping required local licenses, missing early filing deadlines, and mixing personal and business finances. LLC owners also run into trouble by overlooking ongoing compliance tasks, which can lead to penalties or loss of good standing.
How much does it cost to open an LLC in Alabama?
The mandatory upfront cost to form an Alabama LLC is typically $225. This includes the Certificate of Formation and name reservation. However, costs vary based on the services you choose, your location, and the business licenses and permits you need.
How long does it take to set up an LLC in Alabama?
It usually takes a few business days to set up an LLC in Alabama. Processing times can vary, but many business owners are able to form their Alabama LLC in under a week if all information is submitted correctly.
